Examining both favorable and unfavorable budget variances is critical to identifying not only effective management practices but also potential problems or opportunities for improvement. Favorable variances can indicate good management or issues such as unsustainable price reductions, while unfavorable variances can highlight areas for strategic realignment or market targeting. By examining all variances, companies can identify root causes and take corrective action to improve financial performance. This comprehensive approach ensures a balanced and informed management strategy that optimizes the benefits derived from the budgeting process and minimizes negative impacts through timely, qualified investigations and corrective actions.